Norway February Electric Car Sales Numbers Are In, And Tesla Was Toast

The world’s leading Battery-Electric Vehicle (BEV) market, Norway, reported February sales numbers, and they are not good for Tesla.

Tesla’s competition simply did a lot better, led by Audi but also many other brands and nameplates. The top 25 list says it all.

Well, it doesn’t say one thing: That Tesla’s quarters are always dramatically back-end loaded, and to see the full picture we will have to wait for the March month numbers.

There is no question that Tesla’s sales numbers will improve in March, but the question is “How much?” or “To what degree?”.

If Tesla’s third-month sales numbers don’t improve as much as they did historically, it’s a sign that competition has impacted Tesla in one of its key markets.

NOTE: A version of this article was first published on or about March 1, 2020, on my Seeking Alpha Marketplace site.

Norway is the country with the two following important BEV and Tesla characteristics:

The highest level of battery-electric vehicle (BEV) sales, relative to the total car market. For 2019, it was 42%. Add another 14% for plug-in hybrid (PHEV) share, and Norway’s total EV market share was 56% in 2019: Norway December 2019

Ever since 2013, Norway has been Tesla’s most important market in Europe -- until the middle of 2019, when The Netherlands took over, at least through the end of 2019. Norway has also been in contest for Tesla’s most important non-US market globally. Tesla has sold 20,615 Model S units, 13,213 Model X units and 15,906 Model 3 units in Norway since inception: Registreringer av nye elbiler i Norge

As such, all automakers have made Norway a top priority in terms of introducing new BEVs and obtaining great initial sales volume. This makes Norway the proverbial “Canary in The Coal Mine” for the BEV market, from which Tesla derives 100% of its automotive revenue.

Norway is also an “undisturbed” EV market right now, in that there have been no recent country-specific subsidy, mandate or other incentive changes by its government. This includes no major change on the future horizon either, which could impact today’s purchasing patterns. This is unlike some other European markets, where incentives and subsidies either changed meaningfully recently (Netherlands, Germany and Sweden come to mind), or is about to do so soon (such as the UK, on April 6).

I am of course not counting the European-wide CO2 mandate, which took into effect January 1, which impacts across the board. That’s unavoidable right now.

With all of that in mind, how did Tesla (TSLA) do in Norway in February? Here are the top 25 BEV sellers:

As you can see in the table above, we can draw at least six conclusions:

Especially given its relatively expensive price, the Audi eTron is killing it.

Volkswagen eGolf is selling very well despite being on its final few months of production, being effectively replaced by the ID.3 later this year.

The other inexpensive members of The Volkswagen Group -- eUp, Skoda Citigo and Seat M2 -- are also selling relatively well.

Porsche Taycan’s sales number is equal to Tesla Model X and S combined.

Mercedes EQC is outselling Tesla Model X and S combined.

MG -- yes, that old British brand, now owned by The Chinese -- is outselling Tesla Model 3.

What about March 2020 and the March quarter as a whole?

Tesla famously has back-end loaded quarters, where at least 50% of the quarter’s volume is delivered in the last month. This quarter will likely be no different, at least directionally. The question is just “How much?” or rather “To what degree?”

In most previous quarters, starting in March 2019, the Tesla Model 3 has come in late in the game, and in the last month dominated Norwegian BEV sales. It would be a radical sign if this didn’t happen yet again this quarter. However, to what degree?

I have a feeling that all of these new competitive entries will cause material headwinds for Tesla throughout 2020, and it has clearly already begun in the first two months of 2020. If Tesla can’t have a knockout March month in Norway, it will be a sign that Tesla’s sales numbers are a in a bear market, driven by the onslaught of competitive offerings.

This includes brands (MG, DS, Renault, Peugeot, Skoda and Seat) and nameplates (VW eUp and Nissan EV-200) that we don’t see in dealerships on U.S. soil.

Conclusion: Competition has arrived

Audi eTron showed already in 2019 that it could sell as many BEVs as Tesla Model X and S combined on a Europe-wide basis. In 2020, it is joined by numerous other other vehicles, both expensive (Porsche Taycan) and less expensive ones (MG, DS, Skoda, Seat and Peugeot).

One way or the other, this is likely to put material pressure on either Tesla’s unit sales numbers, or its margins. That’s what a dramatic increase in competition does, all other things equal.

Disclosure: I am/we are short TSLA.

Additional disclosure: At the time of submitting this article for publication, the author was short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

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